HARTFORD, Conn. (AP) — The cost of the compromise needed to raise the federal debt ceiling likely will inflict more fiscal pain on states still struggling to recover from the recession and the end of federal stimulus spending.
President Barack Obama and Republicans sealed a deal Sunday to avoid the nation's first financial default and raise the debt limit while slashing more than $2 trillion from federal spending over a decade. Obama said that, if enacted, the agreement would mean "the lowest level of domestic spending since Dwight Eisenhower was president" more than half a century ago.
While the details of the spending cuts to states remain unclear, lawmakers from both parties have discussed the need to cut or impose caps on so-called discretionary spending over the next decade.
That could mean wide-ranging cuts in federal aid to states, affecting everything from the Head Start school readiness program, Meals on Wheels and worker training initiatives to funding for transit agencies and education grants that serve disabled children.
There also was concern among governors, state lawmakers and state agency heads that Congress would make deep reductions or changes in federal aid for health services for the needy, most notably through Medicaid. That could shift more of the costs onto states that already are having trouble balancing their budgets.
"We have the potential for disaster should there be a major realignment in federal funding that results in a cost shift to states," said Nevada state Sen. Sheila Leslie, a Democrat from Reno who recently discussed the issue with Obama administration officials in Washington. "In short, we are teetering on the edge right now, and a cost shift could send us over the cliff."
States already have closed nearly $480 billion in budget gaps since the beginning of the recession, according to the National Conference of State Legislatures.
In Connecticut, for example, officials have struggled to cover a $3.3 billion deficit, accounting for more than 16 percent of the state's main budget account.
About 19 percent of the state's non-transportation revenue comes from the federal government.
"The timing is lousy in every respect," said Benjamin Barnes, secretary of the Connecticut Office of Policy and Management. "It will certainly have a recessionary impact on the overall national economy, and that's the last thing we want right now."
Among the programs that could be affected is a service that delivers meals to the home-bound elderly.
Connecticut received about $4.5 million from the federal government for the program this year and $1.8 million from the state. Marie Allen, executive director of the Southwestern Connecticut Agency on Aging, said the program is a staple for many senior citizens on tight budgets. The federal aid ultimately saves taxpayers money because it helps keep people out of costly nursing homes, she said.
"If we don't have the support for them in the community, people end up in nursing facilities because they don't have proper nutrition," Allen said. "These are the real reasons why we spend more money on skilled nursing care."
State officials across the country were worried about the austerity steps demanded by fiscal conservatives in exchange for raising the nation's debt ceiling, said Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers. He said the association expects states to be affected by cuts, if not immediately, then in the next year or two.
Obama, in his remarks on the debt deal Sunday night, said there will be no initial cuts to entitlement programs such as Social Security and Medicare. But he said both could be on the table along with changes in tax law as part of future cuts.
House Speaker John Boehner, a Republican, telephoned Obama at mid-evening to say the agreement had been struck, officials said.
No votes were expected in either house of Congress until Monday at the earliest, to give rank-and-file lawmakers time to review the package. But leaders in both major parties were already beginning the work of rounding up votes.